Of course, writers who publish books probably would like both more money and readers. However, some recent pieces I've read online has me wondering about what the best pricing strategy might be for e-Books.
The first piece was brought to my attention by @JaneFriedman: "The rise of the 99-cent Kindle e-book," by David Carnoy. In the article, Carnoy looks at some case studies of how some authors have lowered their e-book prices to 99 cents, despite the fact that the optimal royalty from Amazon is for books that are priced at $2.99 or higher.
The lower price points sell better, but they also de-value the product. But if that's what a writer needs to do to sell books, then that might be the only way to build a readership. More on that below.
The second piece was brought to my attention by @ChuckWendig: "The $0.99 Sale: Results Are In," which is a post by Chuck on his Terrible Minds blog. In the post, Chuck breaks down the results of lowering the price point on one of his novels. Basically, the book was selling 40 copies per week. Then, Chuck dropped the price to 99 cents, and the sales jumped to 124 copies in 4 days (on pace to sell 200+ copies in one week).
Chuck's post also tackles some questions that I think are rather interesting concerning how to price e-books: Are you chasing readers or money?
In both the first piece and the second piece, case studies indicate that sales jump when the price is lowered from $2.99 to 99 cents. However, is the lower price actually benefitting the writer? That's a more difficult question to untangle. Let's look at some numbers.
From the first piece, it sounds like a writer receives 35 cents per sale for a 99-cent e-book; the same writer would receive $2 per $2.99 e-book. At the same time, Chuck's numbers indicate that he sold roughly 5 times as many 99-cent e-books as $2.99 e-books.
So, let's say that an author sells 1,000 copies at $2.99. That would equal $2,000.
If the same author could sell 5 times as many copies at 99 cents, they might sell 5,000 copies at the 99-cent price point. That would equal $1,750.
Less money, but more readers. But there are other strategies a writer could try. For instance...
Start high, then discount
An author could decide to take advantage of the initial excitement for a release to use the higher $2.99 price point. Maybe 600 copies of the 1,000 copies sell over the first 6 months of a year. At $2.99, that would equal $1,200.
After that initial explosion of sales, the author could drop the price to 99 cents and collect the other 4,400 readers that rounds out the 5,000 at the lower price point. This would equal an additional $1,540.
Total take: $2,740.
Plus, the author still has the opportunity to reach 5,000 readers. Of course, this is all hypothetical. Would 5,000 people still pay 99 cents for a discounted $2.99 book? It starts to feel like the author is trying to time the stock market. But there are other strategies...
Sell low for new books, high for backlist
Maybe an author decides that he or she just wants to build readership with new books, especially if the author is writing a series of novels. The author just wants readership numbers to increase for the new books. As a hypothetical, let's say that the author's sales numbers increase 100% with each new book and that interest in the previous books (at the higher price point) increases by a smaller percentage.
Book 1 sells 5,000 copies at 99 cents = $1,750
Book 2 sells 10,000 copies at 99 cents = $3,500
+ Book 1 sells 1,000 copies at $2.99 = $2,000
Grand Total = $5,500
Book 3 sells 20,000 copies at 99 cents = $7,000
+ Book 2 sells 2,000 copies at $2.99 = $4,000
+ Book 1 sells 2,000 copies at $2.99 = $4,000
Grand Total = $15,000
After a while, such a hypothetical situation makes it so that you're generating more volume on new sales, but more revenue from those back list titles at the higher price points. And then, maybe you hit a point at which...
The new titles are at a higher price point
Maybe you write books that readers can't wait to read. And you're moving from 20,000 readers to 40,000 readers, and you decide it's time to start charging $2.99 per book, which really isn't a bad price for readers who are frothing at the mouth for your latest work. Maybe 25% of your estimated readers are scared away by the higher price point. That still means 30,000 stick around to pay $2.99, and you receive $60,000 in sales. Woo-hoo!
But do you need to be pinched? Or have water splashed in your face? Is this type of reader-money ratio scenario just a pipe dream? I'll be honest: I don't know.
However, these are some pricing strategies to consider, especially when it appears that 99 cents may be the best way to build a readership this side of free. At the end of the day, e-book authors and publishers will need to make a decision, stick with it, hope for the best, and be willing to change if they're not seeing the results they wanted.
Follow me on Twitter @robertleebrewer
By coincidence, I posted on chasing numbers or readers earlier this week in relation to platform building for writers. Click here to check out that post.
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